Correlation Between Snap and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both Snap and Cornerstone Strategic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Snap and Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Cornerstone Strategic Value, you can compare the effects of market volatilities on Snap and Cornerstone Strategic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Snap with a short position of Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Cornerstone Strategic.
Diversification Opportunities for Snap and Cornerstone Strategic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Cornerstone is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and Snap is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Snap Inc are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Snap i.e., Snap and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between Snap and Cornerstone Strategic
Given the investment horizon of 90 days Snap Inc is expected to generate 3.6 times more return on investment than Cornerstone Strategic. However, Snap is 3.6 times more volatile than Cornerstone Strategic Value. It trades about 0.03 of its potential returns per unit of risk. Cornerstone Strategic Value is currently generating about 0.09 per unit of risk. If you would invest 1,004 in Snap Inc on August 31, 2024 and sell it today you would earn a total of 177.00 from holding Snap Inc or generate 17.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Cornerstone Strategic Value
Performance |
| Timeline |
| Snap Inc |
| Cornerstone Strategic |
Snap and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Cornerstone Strategic
The main advantage of trading using opposite Snap and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Cornerstone Strategic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.The idea behind Snap Inc and Cornerstone Strategic Value pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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